The Dark Side of the ‘Freelance Revolution’

A few days ago, I spoke with a man who runs a chauffeuring service. Unsurprisingly, the conversation turned to Uber, ride-sharing apps in general, and their affect on the transportation industry in general.

“In two or three years, there will be no more employee chauffeurs,” he said, somewhat grimly. “Everyone is moving to the Uber model; every driver will be an independent contractor.”

This prediction slots in nicely with a currently popular narrative: the rise of the “freelance economy.” Our own Kazim Ladimeji has written a number of pieces on this topic already, and I don’t want to spend time parroting his observations. Suffice it to say that many see the increasing prevalence of freelance and contingent work as the beginnings of dramatic change in the workforce. It’s hard to say exactly where the workforce is headed, but the gist of most forecasts is that freelance and contingent workers will soon make up either a significant minority or an outright majority of workers.

Is It True?

Current trends do seem to support these prophecies: writing for Forbes, Jeff Wald and Jeffrey Leventhal note that freelancers and contingent workers made up roughly 7 percent of the workforce in the mid-90s. Today, they account for 15 percent, and that number is expected to grow to 20 percent by 2020.

Justin Fox of the Harvard Business Review conducted some sound research into the phenomenon as well, though he’s (rightfully) more cautious about making sweeping statements: a study commissioned by the Freelancers Union and Elance-oDesk found that freelancers make up 34 percent of the workforce, but Fox appropriately points out that data on freelancers is, for the most part, fairly spotty.

Lacking a shared definition of “freelance work,” many studies arrive at wildly different numbers (e.g., 15 percent vs. 34 percent). Still, Fox acknowledges that, while the Freelancers Union/Elance-oDesk study “doesn’t really support the claims” about the coming freelance economy, it also doesn’t “entirely contradict them either.”

The point I’m building to is this: it’s tough to say for certain that we’re headed for a majority-freelance workforce, but freelance/contingent work and independent contracting are clearly growing. Often, people cast this growth in positive terms, tapping into American fantasies of rugged individualism to hail the coming freelance economy as a world of independence and self-determination, a world where we are no longer employees of “the man,” but “small business owners” in charge of selling our own labor to whomever we deem fit, whenever and wherever we’d like.

In purely idealistic terms, this sounds absolutely wonderful, doesn’t it? It’s a shame, then, that we have to let reality crash the party: a freelance economy doesn’t only make “small business owners” of us all; it also makes us more financially insecure and lets the companies we sell our labor to escape the few remaining responsibilities they have to the workforce.

A Not-So-Rosy Picture of the Freelance Economy

Plenty has been written about the benefits the workforce might possibly derive from a freelance economy, so I’ll waste no time rehashing that here. And, in all honestly, as a former freelancer myself, I certainly see the value of working as an independent contractor. Less space has been given to the freelance economy’s dark side, so that’s what I’ll focus on.

I mentioned that freelance work makes us more financially insecure when compared to traditional full-time (or even part-time) employment. This, I feel, is obvious: with traditional employment, a worker is basically guaranteed a paycheck every week (or two), provided they competently perform their duties. With a steady income, workers can plan for the future, pay their bills, and live somewhat stable lives.

Compare this state of affairs to the freelancer, who earns money on a project-by-project basis. The freelancer doesn’t receive a steady, predictable paycheck. They may make more than enough one month, and then find themselves woefully underpaid for the next three months. It can be supremely difficult to put aside savings, plan a budget, or pay bills on time when income fluctuates so wildly.

Some would argue that this doesn’t happen to good freelancers: their reputations secure them steady work. I’d reply that this is wishful thinking: even the best freelancers are not impervious to the vicissitudes of life. And, sure, employed people face their fair share of random and unfortunate circumstances, too. The difference is that employed people face such circumstances less often than freelancers, who must essentially wade into the job market every single day.

I’m also wary of the way a freelance economy absolves companies of their responsibilities to the workforce — not that we haven’t been doing a great job of pardoning them for a long time now. In the 1970s, companies switched their focus from stakeholders (e.g., employees) to shareholders (I’m summarizing here), and the result has been “shareholder capitalism”: an economic system in which companies see themselves as responsible to their shareholders and no one else. Stakeholder value? Forget about it.

By and large, Americans fell in line with this logic — we bought into theories like trickle-down economics and waged a war on the poor. When people failed, it was because they didn’t work hard enough. When businesses failed, it was because the man was keeping them down, not giving them the tax breaks and welfare they deserved. An absurd state of affairs, to be sure.

The freelance economy gives companies yet another excuse to weasel out of their responsibilities. I don’t generally frequent Gawker, but I think writer Hamilton Nolan expresses my concerns better than I could: “contract employee” designations — a contradiction that captures how companies tend to treat freelance workers, contingent workers, and independent contractors – “serve to give employers all the benefits of having employees, without the responsibilities that go along with actually having real live full-time employees.”

Through a series of strategies — legal or otherwise — companies have found ways to control freelance workers, contingent workers, and independent contractors as if they were permanent employees while withholding the benefits of permanent employment. Freelancers don’t get health care; they don’t get workers’ comp; they’re essentially double-taxed because they don’t have employers to shoulder certain tax responsibilities. Companies, on the other hand, get the work they need done, don’t really have to give freelancers any support, and can kick their contractors to the curb whenever they see fit.

How lovely.

Groups like the Freelancers Union have risen to the challenge of providing freelancers with more stability, but I think more needs to be done. First, workers need to disabuse themselves of romanticized notions of freelance work and really consider both the pros and the cons of independent contracting before rallying under the flag of the freelance revolution.

We also need to really scrutinize employment models and hold companies accountable. A lot of companies try to pull stunts like the one FedEx pulled in order to have their cake and eat it too: they’ll either wrongly classify employees as independent contractors or treat independent contractors like employees. With a possible “freelance revolution” on the horizon, we could see more and more of this behavior — which means we need to place companies under extra scrutiny. If they want independent contractors, they should get independent contractors — not employees with fewer rights.